Burger King, a Florida corporation headquartered in Miami, entered a long-term franchise relationship with Rudzewicz and MacShara, Michigan residents who operated a Burger King restaurant in Michigan. Although much of the day-to-day dealing occurred through Burger King’s Michigan district office, the franchise documents created a continuing relationship with Burger King’s Florida headquarters, required payments to Florida, and provided that Florida law would govern the contracts. After disputes arose over rent and fees, the franchisees fell behind on payments, Burger King terminated the franchise, and sued in federal court in Florida for breach of contract and trademark violations. The franchisees argued that Florida courts lacked personal jurisdiction over them because they had never conducted business physically in Florida.
May a Florida court, consistent with the Due Process Clause, exercise personal jurisdiction over an out-of-state franchisee who entered a substantial, continuing contractual relationship with a Florida franchisor?
A state may exercise specific personal jurisdiction over a nonresident defendant when the defendant has purposefully established minimum contacts with the forum and the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. A contract alone does not automatically establish jurisdiction, but prior negotiations, contemplated future consequences, the parties’ actual course of dealing, and the terms of the contract must be evaluated; if purposeful affiliation is shown, the defendant must make a compelling case that jurisdiction would be unreasonable.
Yes. Florida’s exercise of personal jurisdiction over Rudzewicz was consistent with due process because he purposefully established a substantial and continuing relationship with Burger King in Florida, and litigating in Florida was not so unfair or unreasonable as to defeat jurisdiction.
The Court emphasized that Rudzewicz did not enter a one-shot transaction; he deliberately reached out to create a carefully structured 20-year franchise relationship with a Florida corporation, accepted obligations that connected him to Florida, and engaged in a continuing course of dealing with Burger King’s Miami headquarters. The franchise agreement’s Florida choice-of-law clause, required payments to Florida, and the parties’ ongoing communications made it foreseeable that disputes arising from the relationship could be litigated there. Once minimum contacts were established, the burden shifted to the defendant to show that jurisdiction would be fundamentally unfair, and the Court found that modern transportation, interstate commerce, and Florida’s interest in providing a forum for its resident corporation made that showing insufficient.
Justice Stevens, joined by Justice White, argued that forcing the Michigan franchisee to defend in Florida was unfair because his business was entirely local, his practical dealings were with Burger King’s Michigan office, and the standard-form contract did not give meaningful notice that he would be sued in Florida. The dissent stressed the disparity in bargaining power in franchise relationships and concluded that jurisdiction in Florida offended due process fairness.
Burger King is a leading modern personal-jurisdiction case. It clarified that physical presence in the forum is unnecessary where a defendant purposefully creates a substantial, continuing relationship with forum residents, and it sharpened the two-step analysis of minimum contacts plus fairness. The case builds on International Shoe Co. v. Washington, 326 U.S. 310 (1945); Hanson v. Denckla, 357 U.S. 235 (1958); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); and McGee v. International Life Insurance Co., 355 U.S. 220 (1957). It remains central in contract-based specific jurisdiction analysis and is often contrasted with cases limiting purposeful availment, such as Kulko v. Superior Court of California, 436 U.S. 84 (1978), and later internet/stream-of-commerce decisions.
International Shoe Co. v. Washington, 326 U.S. 310 (1945) |
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Hanson v. Denckla, 357 U.S. 235 (1958) |
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World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) |
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McGee v. International Life Insurance Co., 355 U.S. 220 (1957) |
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Kulko v. Superior Court of California, 436 U.S. 84 (1978) |
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